SHARE



ABOUT THE AUTHOR


Marty Parker
Marty Parker brings over three decades of experience in both computing solutions and communications technology. Marty has been a...
Read Full Bio >>
SHARE



Marty Parker | June 20, 2011 |

 
   

A Perspective on Avaya's Public Stock Offering

A Perspective on Avaya's Public Stock Offering Even after the stock offering, Avaya will need to balance the risk of pursuing "next-generation collaboration" markets with the need to nurture the core voice telephony and contact center businesses.

Even after the stock offering, Avaya will need to balance the risk of pursuing "next-generation collaboration" markets with the need to nurture the core voice telephony and contact center businesses.

After 4 years under private equity ownership, Avaya has announced its plans to raise $1 billion in a public stock offering that will likely value the company somewhere between $5 billion and $8 billion.

Such a public stock offering is always accompanied by a Form S-1 Registration Statement (S-1) which describes the company's business, suggests future directions in support of the investors' decisions, and highlights both the company's value proposition and the associated risks. Eric Krapf has already described the offering in financial terms on NoJitter.com.

This UC eWeekly is a perspective on what the S-1 information might mean to enterprise customers. This is informed from our UniComm Consulting experience with enterprise customers, both as we assist them in planning their Unified Communications roadmaps and interact with them at Enterprise Connect, Interop and other venues.

The following nine categories represent what we see as typical customer expectations relevant to the Avaya S-1 information; each expectation is accompanied by quotes from the S-1 and a brief commentary. A more comprehensive version is available at UCStrategies.com.

1. Core Enterprise Telephony: The S-1 statement opens with, "We are a leading global provider of next-generation business collaboration and communications solutions...." The emphasis throughout the S-1 is on Avaya providing a new "intuitive and personalized user experience, seamlessly integrating various modes of communications and collaboration, including real-time voice, video, instant messaging and conferencing, and non real-time email, voicemail and social networking." This emphasis certainly reflects market shifts to include other communications modes (Presence, IM, e-mail, collaborative workspaces, and video), but may not align with the core telephony expectations of many business enterprises.

2. Call and Contact Centers: The S-1 is very clear that contact centers are a key area of strength for Avaya today and that Avaya needs to respond to the changing customer expectations for contact center functionality. This seems to be a realistic position, reflecting Avaya's current global leadership in this solution category.

3. Economical Migrations for Avaya and Nortel Systems: This customer expectation is barely touched in the S-1, which only says "During the second half of fiscal year 2010, we completed the integration of the Avaya and NES product lines...." The lack of mention is surprising; hopefully, Avaya will prioritize a smooth and economical migration of the customer base to the new Aura solutions.

4. Unified Communications Solution Leadership: The S-1 calls out "Unified Communications Software, Infrastructure and Endpoints" as one of "five key business collaboration and communications product categories." Enterprise voice telephony is bundled into this group, not shown as a separate category. It appears that Avaya is focused on "next-generation collaboration," initially delivered via the Avaya-defined Flare experience, rather than unified communications in the context of flexible communication tools and technologies for job-specific communications interfaces.

5. Interoperation with Other Enterprise Systems: The S-1 describes the ability of Avaya Aura products to interoperate with other software-based products through a wide range of protocols, as well as support for a wide range of user devices, including PCs, tablets, and smart (cellular and WiFi) phones. However, the S-1 does not emphasize the need for interoperation with existing customer investments such as e-mail/calendaring/contact systems, collaboration systems, instant messaging and presence systems, business applications software, and network infrastructure.

6. Reliable System Maintenance: Avaya recognizes this expectation and emphasizes that its "product portfolio has been designed to be highly reliable, secure and scalable and is backed by an award-winning global services organization with services support tools to help our customers monitor, troubleshoot and manage their infrastructure." However, the S-1 also points to the risk that, "Business collaboration solutions are complex, and design defects, errors, failures or 'bugs' may be difficult to detect and correct."

7. Clarity of Sales and Service Channel Relationships: The S-1 states Avaya's intention to "leverage our sales and distribution channels to accelerate customer adoption and generate an increasing percentage of our revenue from these new high value software solutions and user experience-centric applications." Avaya indicates that developing skills in and relationships with the channel Partners will be an area of attention and investment. However, it also describes risks related to channel development, channel loyalty and channel conflict, leaving the overall sense of volatility and risk in this area.

8. Reasonable Pace of Innovation: The S-1 states Avaya's R&D investment at 8.5% of revenue, using SIP-based technologies with major development efficiencies. It is not clear whether the efficiencies of SIP-based development will close the apparent gap with large competitors who are spending between 14% and 17% of revenues on R&D (across those competitors’ entire portfolios).

9. Vendor Strength, Market Leadership, Reasonable Direction: The S-1 appropriately points to Avaya's market share leadership in voice telephony, enterprise (voice) messaging, contact centers, and related services. The S-1 also shows that Avaya is effectively managing their financial performance, resulting in cash-neutral operations and positive EBITDA, even though Avaya is losing money on a full P&L basis. However, even after the stock offering, it seems that Avaya will need to balance the risk of pursuing "next-generation collaboration" markets with the need to nurture the core voice telephony and contact center businesses.

If this topic interests you, please read the more comprehensive article at UCStrategies.com.





COMMENTS



Enterprise Connect Orlando 2018
March 12-15 | Orlando, FL

Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

November 1, 2017

Your customers (internal and external) demand that you offer them the ability to connect by any means. With the adoption of cloud communications tools you now have access to an expanded portfolio o

October 18, 2017

Microsofts recent Ignite event had some critically important announcements for enterprise communications. Namely, Microsofts new Team Collaboration offering, Teams, will be its primary communicatio

September 20, 2017

Customer experience can make or break your business. But how do you achieve outstanding customer service when you're dealing with outdated organizational structure, lagging technology, dated proces

September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.